The Abridged version:
- In the strongest warning issued yet, a state takeover at Sacramento City Unified School District appears unavoidable, experts said in a new report this week.
- The district should consider an emergency loan and the loss of local control that comes with it before the end of summer.
- Without a resolution soon, as many as 5,000 district employees could go unpaid by early next year.
- Advisors from a state-funded crisis team will be at the district’s school board meeting Thursday evening to present their findings and warnings.
The fiscally-distressed Sacramento City Unified School District is on borrowed time and should consider a state takeover now, according to experts in California school financials.
Local leaders have spent months trying to recover enough in savings to escape a multimillion-dollar crisis. But advisors from the Fiscal Crisis and Management Assistance Team, a state-funded organization that assists districts in budget emergencies, say officials have exhausted available options and are barreling towards insolvency.
They are urging officials to consider a state loan and receivership before the end of summer. Otherwise, they say the district is projected to be out of money for payroll and other crucial expenses by early next year.
“The facts are they’re not going to make it through next year,” Michael Fine, CEO of the statewide crisis team, told Abridged.
Act quickly or wait to go broke
Sacramento City Unified is expected to be cashless come July, according to Fine’s team and the district’s own most recent report.
Officials have options to eke out a few more months, Fine said. They include moving dollars around within their own accounts and getting an advance from the Sacramento County Office of Education.
But those salves would only take Sacramento City Unified through early next year, at best, according to Fine.
If and when the district runs out of cash and back-up plans, they would need to turn to the Legislature for an emergency loan. The problem, Fine said: The best time to get that loan is by the end of summer.
That’s because the Legislature will be out of session September through early December. With the time needed to move legislation through and a roughly two-month gap between approving and receiving a loan, the earliest Sacramento City Unified could see emergency funds in 2027 is likely late March or early April.
The time between the district running out of money and the state being able to provide a loan could mean around 5,000 employees going unpaid, according to Fine.
Trustees will have to decide
Fine will be at Sacramento City Unified’s board meeting Thursday evening to prevent his team’s findings and warnings.
Ultimately, he said it will be up to board members whether they want to act now or wait.
“The FCMAT report is obviously concerning,” district spokesperson Brian Heap said. “We look forward to seeing the presentation Thursday to understand the options available to us.”
Trustees are not expected to take action on Thursday. Fine said he recommends they have multiple conversations and make a decision as soon as possible.
The likelihood of the district avoiding state receivership, he said, is looking unavoidable. Fine and his agency have been warning the district since 2018 that it must fix systemic fiscal problems.
“We absolutely wanted to avoid this,” Fine said in an interview. “I think they just took it too far to the cliff’s edge.”
Savannah Kuchar is a reporter covering education. She came to Sacramento to be a part of the Abridged team and contribute to a crucial local news source.